by Eifion Bibby of Davis Meade Property Consultants
CHrIstMas is only a few weeks away, a time for celebration and spending time with the family.
For farmers, the festive period may also offer the odd extra hour away from farm to spend time thinking about the future of the business. With Brexit on the horizon we face a future of uncertainty. subsidies as we know them are likely to disappear in not too many years, so forward planning is more important than ever if the farm business is going to have the chance to thrive in the years ahead.
Make time over Christmas to think about your business as a whole and how you can get it on a firm footing. this might mean fine tuning your existing enterprises, diversifying into new ones or possibly looking at re-financing your borrowings to take advantage of current competitive interest rates.
at the same time you could also think about succession, not just succession of the tenancy if you are a tenant farmer, but succession as a whole for the farm business.
We want to encourage families to get round the table and talk about the future. Find out what everyone wants or hopes for in the years ahead. some members of the family may not want to get involved in the farm at all but this doesn’t mean they shouldn’t be involved in succession planning.
Farmers may be concerned about passing on the farm to married children in case unfortunately there is a divorce; but there can be ways round this to protect the family assets. the key is that the business is secure and is set on a solid foundation for the future.
there have been high-profile cases where people who were expecting to be left the farm have taken the family to court and won – so prevention is better than cure. a parent’s intent as regards to legacy may not suit everyone, but everyone should know the plan so that there are no surprises at a time of bereavement.
For tenant farmers the agricultural Holdings act 1986 sets out certain eligibility criterion for statutory succession to a tenancy, including what is known as the livelihood test which requires the potential successor to have earned their principle source of livelihood from agricultural work involving the holding for five of the previous seven years.
the right business structure for the farming enterprise should also be considered with the arrangement being properly documented so as to reduce the opportunity for misunderstanding at a later date.
there are many other considerations to think about, including taxation and you may well need to speak to your accountant or financial advisor who can help to make sure your farm stays in the right hands when the inevitable happens and without too much stress and financial cost.
It is incredibly important to get around the table and have that conversation. Difficult decisions may be required in certain circumstances and its recognised that sometimes a trusted and experienced ‘intermediary’ may be advantageous in providing direction.
However, talking openly, on a meaningful basis, about future aspirations and requirements could well be cheap now but prove to be extremely valuable and cost effective in the long term.
We wish you all the best for Christmas and a happy and prosperous New Year.
Eifion Bibby is based at the Colwyn Bay office of DMPC telephone 01492 510360,